Zed and a few others critical of the buyback,You of all people...

Zed and a few others critical of the buyback,

You of all people should understand the principle of "sell high, buy low" (it's like short selling). In this case CDU has sold shares at $3.80, only to buy them back at $3.23.

Inital revenue is therefore 595,467 x 3.80 = $2,262,775
Buyback cost = $1,920,901

So far that represents a gross profit of $341,874 on the deal.

The outlay to do that was something like $1,920,901, the present value of the asset they purchased is $1,863,811 which gives a net profit at this moment in time of $284,827.

That aside, CDU has a guaranteed purchaser of this asset at a future date, and assuming the future purchase price of the asset is $3.80 x 595,467, the future value of the asset is therefore $2,262,774.

Invoking the spirit of Tim North, "But wait, that's not all":

In the three weeks since selling the shares to OW for $56m, CDU will have earned at least 56m x 6.5% / 52 x 3 = $210k interest.

Consolidated profit to date therefore is $495,000.

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Criticism of the buyback's (in)effectiveness in raising the SP is also a great big failure to recognise the reason for the buyback in the first place - If CDU want to buy hard enough and fast enough of course the SP will rise. However, if the reason for the buyback is to collect shares from people foolish enough to sell them (shorting or otherwise) cancel them, and re-issue them at a later date for 50-60cents higher, then the smart move would be to keep the action at a profitable level, and that level seems to have been established at 3.10 - 3.25. The Net result is the number of shares on issue will be lower, and that is good for my bag of jelly beans thank you.

If you have an opinion about the source of funding for the buyback, remember this, that your opinion fades into insignificance at the mention of the words "lawful activity."

Now if all of the above is too hard to comprehend, please refer to Hooters Used Car Lot analogy.